Crypto scams one should be aware of
One can never be too cautious. Let’s take a look at some of the popular scams that victims have fallen prey to.
One anecdote revolves around an impersonation scam where an individual was targeted by malicious actors pretending to be representatives of a popular Crypto exchange. They got in touch with the individual, promising him extraordinary gains on investment, which lured him into sending money through a UPI ID on a third party app. Once the transaction was done, he noticed that the app had disappeared from the Play Store. The individual made a payment to the UPI ID while another user with the same UPI ID was concurrently engaged in a transaction (specifically a peer-to-peer transaction) on a different exchange. This elaborate ruse was discovered when the individual filed a complaint, and an investigation was initiated against it.
In another incident, a user was offered a make believe token with fake whitepapers to support its existence. The promise of it being listed on popular exchanges and subsequent price hike tempted the unsuspecting victim, who thought he was getting a steal deal by paying less money as an early investor. Unfortunately, once the money was deducted, the scammers disappeared into oblivion. Needless to say, the token did not make its way to any exchange.
There has been a spike in fake job listings in Crypto which mimic job descriptions from roles advertised by reputed companies. With a rising interest in Web3 jobs, it is a gold mine for scammers to entice job seekers with offers. The job poster seeks personal information from applicants which can be exploited or might demand a payment in Crypto assets to their addresses. Once the payment goes through, the scammer takes off with the money. In fact, some of them may also involve asking applicants to travel abroad where they are held as captives against their will, demanding ransom for their release, or forced to join hands with actors committing online Crypto scams. On May 22, 2023 the FBI issued a warning to U.S. citizens living or traveling abroad to be aware of false job advertisements linked to labor trafficking.
In recent incidents, certain YouTube channels have been identified for deceptive practices involving well-known figures like Elon Musk and Ryan Selkis. These channels pretended to offer investment advice on specific tokens, misleading viewers into making investments, going against the principle of responsible trading and non-promotion of altcoins to prevent market manipulation.
India has also witnessed a surge in romance scams linked to Crypto. Scammers use AI-generated images to lure individuals on dating apps or social networks, and manipulate victims into making payments in Crypto.
Cryptojacking, the unauthorized use of individuals’ computing resources for Crypto mining, saw a global surge, surpassing 300 million incidents by June 2023, as reported by Sonicwall.com. Although less prevalent in India, it remains a concerning issue.
Chainalysis data indicates a rise in ransomware attacks, with over $175.8 million more extorted between January and June compared to the same period the previous year, despite a decrease in overall illicit transaction values.
Additional risks include phishing attacks, where fraudsters request private keys or unique ID information to steal funds, and Ponzi schemes that lure investors under the guise of legitimate projects but ultimately result in significant losses and market volatility. These scams persist in various forms, warranting continued vigilance.
Representation of fraudulent transactions
One upside is that crypto scammers have taken in nearly $3.3 billion less in 2023 than they did in 2022, according to Chainalysis. While 2022 did witness a cautionary approach and better security measures by Crypto projects, fraudulent transactions went further down in 2023. The same report by Chainalysis suggests that scammers have pulled in 77% less revenue from January to June 2023, than they did for the same time period in the previous year. This is a positive sign since 2023 has witnessed price surges of tokens, especially Bitcoin’s rapid price surge after its potential ETF announcement. Historically, these have indicated opportunities for scammers to lure investors who want a share of the pie and would put in their money often without a thorough background check on platforms or projects.
Source: Chainalysis
Protecting yourself
If the incidents mentioned above provided you some relief that you weren’t one of the victims, don’t take your fortune for granted. Your lack of caution and lousy background check skills is what scammers will capitalize on if you aren’t careful. It might be encouraging to know that the law enforcement agencies are equipping themselves with adequate capacity to identify and prevent Crypto scams.
Crypto exchanges cannot guarantee monetary gains or returns; the responsibility rests with the trader and their investment decisions. Exchanges will not initiate contact through third-party channels. Trust information only from their official handles and always verify. Unsolicited messages on platforms like WhatsApp and Telegram often lead to scam sites unrelated to legitimate exchanges. Avoid engaging with emails or messages with spelling errors or featuring images or videos of renowned Web3 personalities urging you to invest.
Understand that exchanges cannot resolve issues involving scammers and third-party services, although they can provide ample information should issues arise. Beware of unrealistic offers that appear too good to be true. Before succumbing to impulsive decisions, conduct thorough research on the project and its background, and verify the identities of those you engage with. Do not fall prey to offers promising 100x gains or demanding upfront payments for tasks. Avoid investing through third parties if possible. Most exchanges have a simple UI, making it easy to invest digital assets by yourself. Lastly, do not forget to report any suspicious activities or scams to your local law enforcement, which can aid efforts in raising awareness.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)